Tag Archives: Republic Holdings

Monday: PlaneBusiness Banter Returns!

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Hello everyone! I hope all of you had a wonderful summer, and a great Labor Day holiday.

After our usual three-week hiatus from publishing, PlaneBusiness Banter returns Monday morning.  I have to say, there is certainly no shortage of material to work with — especially considering the events of the last week concerning United Airlines and the resignation of its Chairman, President, and CEO Jeff Smisek and two of his top executives.

We’ll dissect this turn of events and let you know our take and how we see this affecting the airline going forward. I’ll give you a hint: it’s not a bad thing for the airline. At all.

But we also have the continuing drama at Republic Holdings. Will they go into bankruptcy? Clearly now we see the “last best offer” from management was not the last best offer. So what credibility does that give management from a negotiating standpoint?

These are just two of the many stories we will be talking about in this week’s issue, along with the latest DOT operational performance statistics, stock performance, and more.

Just a reminder. If you are not a subscriber to PlaneBusiness Banter, you can drop a note to PBsubs@PlaneBusiness.com to find out how you become one.

 

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg Hello everyone. It’s that time again. PlaneBusiness Banter is now posted. This week we are talking airplanes, pilot contracts and we wrap up the third quarter earnings season with our in-depth look at the recent earnings calls from WestJet, Air Canada and Republic Holdings.

American Airlines had clearly wanted a contract with its pilots in place before the AMR board meetings began Wednesday of this week. Does not look like that is going to happen.

The lack of a contract continues to drag down shares of the airline. Tuesday shares slid 1%, closing at 1.92. Shares dropped 5% on Monday.

Looking at what the company has proposed, I think it’s going to be hard for the APA Board to sell the deal to its membership given the wide disparity between the numbers its members had proposed and numbers the airline has proposed.

We look at the 101 page position paper the pilots at United Airlines distributed last week regarding their concerns over training and integration procedures with the merged airline. Who knew the FAA inspector who was fined for his involvement with the Southwest Airlines fiasco a few years ago is the same FAA inspector involved in the FAA SOC [single operating certificate] process at United Airlines?

Of course we also wrap up the third quarter earnings season as we take our in-depth view at the recent earnings call from Republic Holdings, Air Canada, and WestJet.

Then there is the Dubai Airshow. We give you all the top news from the event that passed $55 billion in orders as of Tuesday.

As usual, all this and much, much, more in this week’s issue of PlaneBusiness Banter .

PlaneBusiness Banter Now Posted!

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Hello everyone.

It’s that time once again. This week’s edition of PlaneBusiness Banter is now posted.

This week we have yet more third quarter earnings to discuss, as we take in-depth looks at the results posted by Allegiant, SkyWest and Pinnacle.

Next week, we wrap up our third quarter earnings call coverage as we look at Republic Holdings, Air Canada and WestJet.

Speaking of WestJet, our moles tell us that we should expect to hear another “important” announcement along with the airline’s third quarter numbers this week. That would make sense. It would also explain why the airline is late in reporting their numbers for the quarter.

Speaking of Republic — did you see what happened to shares of Republic Tuesday? That’s right. Shares picked up a whopping 61% on the day on incredibly heavy volume. The airline reported better than expected numbers and also gave clear guidance on how it plans to divest itself of Frontier Airlines. Investors liked what they heard. Obviously.

Late Tuesday there was an update posted on the AMR negotiations website concerning the negotiations between American and its pilots. This follows a week in which all indications continue to point to news of a new tentative agreement between American Airlines and its pilots being announced in the not-too-distant future.

Meanwhile, pilots at Southwest Airlines and AirTran overwhelmingly okayed their proposed seniority agreement. No surprise there.

Internationally, Singapore Airlines, IAG Group and Emirates all reported sharp declines in earnings for the quarter last week — as higher fuel prices took their toll.

Meanwhile, does IAG have a deal to buy bmi from Lufthansa or not? Depends on who you are asking. If you are asking Willie Walsh, the answer is yes. But if you are asking Richard Branson, the answer is apparently no.

Question of the week — How many weeks does it take to train new Boeing 787 pilots? Answer: Five weeks.

No, that’s not a joke. That’s what ANA is doing. Five weeks?

As usual, all of this, and much more — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Good evening earthlings! This week’s last mega-earnings issue of PlaneBusiness Banter is now posted. This week we dig our way through the recent earnings results and calls from Pinnacle, SkyWest and Republic Holdings. Let me put it this way. This is not an easy time for regional airline operators. Three different stories, three losses.

In other news, we talk a lot this week about why it is I am concerned about the negotiations between the United Airlines and Continental Airlines pilots. This situation has gone on far too long. These negotiations should have been wrapped up in no more than 60 days.

But now negotiations have become centered around the big “S” word. Union squabbling, turf wars, and intra-union power struggles that all go back to ….seniority.

These two groups had a choice going into these negotiations: follow the blueprint set at Delta/Northwest or the blueprint set with America West/US Airways. Every day that passes — it appears both groups are following the wrong set of plans.

I tell subscribers this week why I believe these negotiations are now at the tipping point.

In other news, we talk this week about two analysts and their respective research reports. First, we talk about Avondale Partners analyst Bob McAdoo’s research note on AMR. It was, without a doubt, the most scathing review of the inability of management at the airline to do what it needs to do that I have read from any Wall Street analyst. As he points out — the airline continues to lose at least $1 billion in revenues as a result of bad decisions.

So — what are they going to do about it?

Gary Chase, analyst with Barclays, issued a nice preliminary review of what he thinks the Southwest/AirTran deal is going to mean to Southwest. Both short-term and longer-term. We’ve admired Chase’s take on Southwest for years — and his piece last week was no exception. Opportunity? Yes. But with risks.

We’ve got the March DOT Air Travel Consumer Report, we’ll go over how the airline sector did last week (I’ll give you a clue — jet fuel rose again) and we talk a bit about the upcoming IPO from Spirit Airlines, as well as the results issued Monday from Steve Hazy’s new Air Lease Corp.

And more!

Subscribers can access this week’s issue of PlaneBusiness Banter here.

PlaneBusiness Banter Now Posted!

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Greetings to all you turkey lovers out there.

It’s Monday. It’s time for this week’s issue of PlaneBusiness Banter.

Speaking of turkeys, yes, we’re talking about the TSA this week. Isn’t everyone?

But we’re also talking about Deutsche Bank analyst Mike Linenberg’s rather gushing research note on Republic Holdings. Also — where does Mike think the industry now has too many competitors?

We’re talking union stuff too. Two more thumbs down employee votes at Delta Air Lines, a thumbs up from the Southwest Airlines’ flight attendants on their contract ratification and a thumbs up ratification from the AirTran pilots on their new contract.

However — there is one part of the new AirTran pilot contract that we are curious about. Can you guess what part that is?

Then there is the picketing this week by the Continental and United pilots. Pahleez. Is this really necessary?

Not sure if you have been keeping up with the fight north of the border, but Canada and the UAE are about to go to blows over the issue of giving Emirates more access into Canada. I mean, this is getting serious.

We have a lot more information this week regarding exactly what happened when that Qantas A380 had an engine suffer an uncontained failure. The laundry list of items that were affected on the aircraft is not pretty.

Meanwhile, as has been the case since the beginning, most of the information coming out concerning the problems with the Rolls-Royce Trent 900 engine is not coming from Rolls-Royce.

Then we had Boeing running around, telling websites they had to remove photos of the damage to its 787 test aircraft. Lovely. I do so love it when a company thinks they can make a problem go away by removing the evidence in a rather heavy-handed manner.

On the GDS front, American Airlines seems more determined than ever to cause mayhem and madness in the travel agency business. More on their latest moves in this week’s issue as well.

All this and more in this week’s issue of PlaneBusiness Banter.

Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Okay all you hungry people. This week’s issue of PlaneBusiness Banter is now posted.

Whew.

This is the last earnings issue for the quarter, and that is a good thing.

Next week we can get back to our normal format and usual publishing schedule. Right before we embark on our Turkey day extravaganza.

But — before then — this week we have our hand’s full.

First, we have an update on the Rolls-Royce Trent 900 engine failure involving the Qantas A380. All the Qantas A380s remain grounded. Rolls still isn’t saying a lot. But everyone else sure is. Engines are apparently being taken off the A380 production line, Singapore Airlines has swapped out three engines already, and, well, this is a very serious situation.

It is going to make for a very serious dent in Rolls-Royce’s net profits as well, as you can bet all these airlines are keeping tabs on their expenses incurred and Rolls is going to receive the final bill.

Not to be left out, Boeing had its own problem last week with one of its 787s — as it was forced to land after a fire broke out in an aft electrical panel.

When we’re not talking aircraft and engines, we’re talking TSA.

As someone who is now faced with the prospect of having to go through an “extended pat down” every time I fly as a result of having a big piece of titanium in my hip, I am not happy about the new “group and grab” procedures.

Funny thing though — we received a number of notes this week from airline crew members. It appears that the TSA has pulled back on insisting on either the AIT scanner or the “extended pat down” for crew members. Not in all locations though.

No, the TSA has not issued an official backdown. But I’ve received enough notes to tell me that there has been a relaxation in the previous directives.

We also wrap up third quarter earnings coverage this week with our own “extended” look at Republic and Pinnacle.

If you took a look at the stocks of either airline and how they performed for the last week — you might have some questions.

In the case of Pinnacle, shares soared.

In the case of Republic, they did just the opposite.

We’ll tell you why.

We also go over the September DOT Airline Consumer Travel Report. And the September tarmac and cancellation numbers. Very interesting “rounding” of numbers going on here. We talk about all that as well.

There was a rather bizarre Airbus A380 order announced last week, the DOT and FAA sought to assure air travelers that they are working to make sure older aircraft are safe — only problem is that the efforts won’t take effect for years — and hey, the future King of England’s wife-to-be has two parents who met while working for British Airways.

We only talk about the important things here at PlaneBusiness Banter.

Subscribers can access this week’s issue here.

Frontier-Republic: Clearing up a Possible Misperception

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I had an interesting note from a former subscriber to PlaneBusiness Banter this afternoon. Since he no longer reads us on a weekly basis, he took my earlier post about the Frontier employee rogue blog as implying that I am not a fan of the Republic Holdings/Frontier/Midwest Airlines experiment.

Au contraire. If any of you out there think the same — continue reading.

I have been a pretty optimistic supporter of Mr. Bedford’s experiment over the last year. Although I have been concerned about his lack of cash. But for those of you who are subscribers and read my review of the Republic Holdings third quarter earnings call in November — you know that I continued, at that point, to give the boys in Indy the benefit of the doubt as they made their way across the mine-filled tundra of their cut and paste business plan. With two BIG conditions.

Those conditions were: that the guts of the Frontier Airlines management team, headed by Sean Menke stay associated with the new venture. In November, this was assumed to be the case.

This is no longer the case.

Second condition: that the brain trust at Republic Holdings did not dismiss the incredible value of the employee/management relationship at Frontier Airlines. That it not start to rip that culture apart — all in the name of making some numbers look better.

Unfortunately, I am afraid now that the continuation of that valuable Frontier culture seems to be in danger — given some moves of late by the Republic management team.

So no — I was, up until recently, a rather optimistic observer of the grand experiment.

Then again, I’m not saying that the whole thing is dead — I’m just not encouraged by the recent news coming out of Indianapolis. Much less my email box — especially from those close to the Frontier operation.

Rogue Frontier Airlines Blog: This is Good Stuff

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One of the things that airline management team members have to understand is this — In this day of blogs and internet chat rooms — you can’t sweep the voice of concerned and/or pissed off and/or disillusioned employees under the rug like you used to years ago.

Nope. Those days are long gone.

Need we talk about the series of “Hitler” videos from the various airline pilot groups that popped up last year?

Today, the latest example of this: A blog by the name of “All Things Frontier Airlines.“

No, I don’t know who is writing this effort, but whoever it is is both very knowledgeable about the airline, and he/she has a razor wit to boot.

Kudos to whomever is writing this. It is one of the better “rogue” efforts we’ve seen in a long time.

Here is a snippet from the Thursday post.

“Today, Republic found themselves in the news twice. The first article which appeared in the Denver Post, was aptly named “Republic chief has “work to do”. For the most part the article was pretty mundane, but for me the most telling quote in the piece was, “Bedford said there are no immediate plans to replace Menke but that if a successor is named, the person will be added at Republic headquarters.” Apparently, Bedford has obtained a copy of “Revenue Management for Dummies” and feels that he no longer needs the services of anyone with experience in that field or that moving the functions to Indianapolis will magically solve all of those issues like it has everything else. The article goes on to mention that Frontier will be receiving 3 Airbus 330’s and 7 Embraer 190 aircraft. I truly hope that the A330 mention was a misquote or a typo instead of A320, but at this point I can’t say I would be surprised if it was not and Mr. Bedford doesn’t realize the differences in the aircraft. Most of all, I really like the title of this article, “Republic chief has “work to do”. Naturally, I began to wonder what work Mr. Bedford has in store. After much searching, I was finally able to obtain this mysterious “To Do” list and as I think you will see, it offers much insight on what it takes to be the CEO at Republic Airways.

Brian Bedford To Do list:
– Check E-Mail and forward “Obama no birth certificate email” again to the non believers.
– Look up current fuel prices and figure out what can be moved to Indianapolis or who’s pay can be cut as a result.
– Take a nap.
– Call CEO of Qwest and convince him to move the business and employees to Indianapolis.
– Prepare weekly letter to employees by incorporating at least 2 scriptures, 1 quote from Winston Churchill, and the evils of same sex marriage.”

Latest SWAPA Update on Pilot Negotiations Regarding Southwest Airlines Bid for Frontier Airlines

Here’s the latest missive from the Southwest Airlines’ pilot group, SWAPA, to its members. FAPA is the Frontier Airlines Pilot Association, the union that represents the Frontier Airlines’ pilots.

“It has been a whirlwind week for your M&A Committee. We have been in meetings with our M&A counsel in Washington Monday and Tuesday and quickly returned to Dallas on Wednesday for a pressing meeting with FAPA. We would like to bring you up to date on the Frontier transaction.

Weeks ago, the Company approached SWAPA for ideas on how to complete the Frontier transaction with our pilots’ support. We expressed our concerns about new federal legislation on the books (McCaskill/Bond) and its potential effect on pilot seniority at Southwest. The Company, at SWAPA’s request, included a “labor contingency clause” requiring labor agreements in place prior to the closing of the Frontier acquisition. This action took the possibility of binding arbitration out of play and protected our pilots from a harmful arbitrated seniority integration.

As the Company was developing their formal binding proposal to acquire Frontier out of bankruptcy, Southwest bankruptcy counsel expressed concern that the Southwest bid could be excluded from the auction process because Frontier legal counsel deemed the proposal “not qualified” for the auction process due to the labor contingency clause. However, the labor contingency clause would be deemed acceptable and the bid deemed qualified if SWAPA and FAPA reached an Agreement in Principle for seniority integration. That triggered negotiations Thursday between SWAPA and FAPA.

SWAPA’s concerns throughout this process have been to protect our seniority list and our Collective Bargaining Agreement (CBA). The only way to adequately protect our entire pilot group was to place the FAPA pilots below the SWAPA pilots on our new Master Seniority List.

FAPA’s concerns are:

  • Job Protection
  • Seat Protection
  • Pay Protection
  • Domicile Protection

FAPA’s position was for relative seniority with a “variable” for the ratio for integration. Clearly, meeting all of FAPA’s concerns would be an enormous windfall for Frontier pilots at the expense of Southwest pilots.”

Oh boy. Here we go. All of these concepts sound very familiar don’t they? Relative seniority. “Stapling” the Frontier pilots to the bottom of the list.

And this is supposed to be finalized with both groups signing off on it today??

Right.

Well, there you have it. Either there is an agreement in principle with both pilot groups as to the question of seniority, or it appears that the bid by Southwest will not be considered to be a “qualified” bid.

Do you suppose that Southwest knew this all along, and this is merely an anticipated ‘squeeze play’ made by the company, assuming that the “urgency” of the situation would prod both groups to an agreement before the clock strikes twelve? Or was this a surprise at the last minute to all parties concerned?

Stay tuned.